The Economics of Pesticide Use and Regulation

Pesticides enhance agricultural productivity, but the environmental and health side effects of their use justify government regulation, a subject of continuing societal debate. Bans on pesticide use are the principal regulatory device used in the United States. The economic impacts of such bans depend on the availability of substitutes, supply and trade conditions, and research and development. Without substitutes, pesticide bans result in reduced production levels and higher prices, a substantial loss of discretionary income to consumers, and a redistribution of income among agricultural producers. Most food safety concerns can be addressed by establishing standards and markets for pesticide-differentiated products, but worker safety and clean water concerns will require direct controls. Pesticide-use fees are shown to be more efficient than outright pesticide bans as a mechanism to obtain environmental goals.